VOO Archives - Agnostic Investing

SA #12: VOO – Global Revenues And Global Diversification Are Not The Same

2023-11-112023-02-08

VOO: Global Revenues And Global Diversification Are Not The Same
February 07, 2023

Summary

In 2017, about 29% of S&P 500 revenues came from overseas. This fraction increased to about 40% by the end of 2022.
Some investors argue that this global exposure is a substitute for true international diversification, i.e., that it is not required to invest in non-US stocks.
Global revenues certainly help to stabilize the fundamentals and stock prices of the underlying companies, but they are unlikely to save your portfolio from bets on the wrong country/region.
A counterexample from European stock markets shows that true global diversification was much better to escape the region’s underperformance than overweighting European companies with a higher share of global revenues.
That said, the Vanguard S&P 500 ETF (VOO) remains an outstanding instrument to track the S&P 500 Index. But despite global revenues of the underlying firms, it remains a bet on US large caps.

2023-11-112023-01-04

VOO: One Of The Best S&P 500 ETFs, But Far From Truly Passive
January 4, 2023

Summary

The S&P 500 Index is probably the most important equity index in the world.
For many investors, an ETF that tracks the S&P 500 became synonymous with passive investing.
In this article, I will compare the three largest ETFs on the index (SPY, IVV, and VOO) and challenge the passiveness of the S&P 500.
Based on historical performance, current expense ratios, scale, and the underlying manager profile, I would personally use the Vanguard S&P 500 ETF to track the index.
Within the US, the S&P 500 is a reasonable passive benchmark. From a global perspective, however, it is an active bet on US large caps.